Ford will still build the next generation Fiesta in Germany following an agreement with the works council. Ford inked an agreement that will cut the number of shifts from three to two at its vehicle assembly while increasing the frequency of shifts at its engine production to three.

While the agreement -- which covers all of Ford’s 24,000 Ford employees in Germany – entails a vow not to cut jobs, the carmaker could reap up to $400 million in savings on production costs from 2017 through 2021.

Stephen Odell, Ford’s head of Europe, said in a statement that the production of the Fiesta in Cologne underscores the carmaker’s commitment to invest in competitive vehicle production in Germany.

Ford said that full shifts can be introduced on a daily basis, adding that shifts could also be cut or extended by 30 minutes according to demand. Ford will also have its employees carry out functions currently provided by suppliers to make the Cologne facility more cost efficient.

Barb Samardzich, COO of Ford of Europe, remarked that they wanted to make the “Fiesta profitable in Cologne,” saying that the “breathing factory” would make the site “globally competitive.”

Ford’s decision to still build the Fiesta in Cologne should stave off worries that its output would be shifted to Romania, which boasts of labor costs around a tenth of those in Germany.

Ford is planning to return to profit in Europe next year, and will close three sites in the region by the end of 2014 to cut costs and trim its losses. Ford chief executive Alan Mulally said last month that the carmaker’s operations in Europe are “on track” for the turnaround, with losses for this year seen to shrink from the $1.6 billion logged in 2013.